C ontingent labor spend is an estimated $270 billion worldwide. And according to a recent Accenture report, that figure will explode over the next decade to a nearly trillion-dollar market as more businesses realize the benefits of leveraging this flexible, on-demand workforce. This begs the question: Are your contingent workforce costs higher than they should be?
Contingent workforce costs often rank in the top five spend categories for companies. The growing contingent workforce easily exceeds hundreds of millions and in some cases billions of annual invoiced expenditures for enterprises. Despite the growing investment in the contingent workforce, however, nearly 60% of all contingent labor is unaccounted for in financial planning, forecasting and budgeting. This can lead to rogue contingent resource spend, diminishing returns and unnecessary risk.
Another costly oversight is that today’s war for talent typically lacks category management. Significant non-employee volume results in buyers often overpaying for contingent workers and certain skillsets. Also, if you lack visibility into what you’re spending on contingent workers, you can’t be certain that you’re achieving the cost savings you’ve negotiated into your supplier contracts.
The bottom line? This spend category is a long ways from being optimized. The good news is that opportunities exist for you to reduce program costs and increase the ROI on your contingent workforce by improving contingent workforce visibility and enhancing contingent workforce management (CWM) processes.
The right technology can help you manage your program far more efficiently and enhance your strategic decision-making. How? A vendor management system (VMS) in particular automates CWM workflows and the process of sourcing, hiring, onboarding, offboarding and invoicing contingent labor. It also enforces controls, delivers category visibility, and more.
The end-to-end visibility across your global contingent workforce and highly efficient processes enable you to achieve immediate cost savings. In fact, industry analysts estimate that companies that implement a VMS reduce contingent workforce expenditures by 10% to 25%.
So if you’re in the large percentage of enterprises with decentralized contingent workforce operations, along with multiple contracts with many staffing agencies at the local, regional and global levels, it might be time to consider leveraging a VMS solution that can bring order to the chaos.
To learn more about unforeseen contingent workforce spend and how to control it, download the IQN Key Insight eBook: “Reduce Program Costs.”